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11.8.2011 Official
Journal
of
the
European
Union L
206/1
II
(Non-legislative acts)
REGULATIONS
COUNCIL IMPLEMENTING REGULATION (EU) No 803/2011
of 4 August 2011
repealing the countervailing duty on imports of certain broad spectrum antibiotics originating in
India and terminating the proceeding in respect of such imports, following review pursuant to
Article 18(2) of Council Regulation (EC) No 597/2009
THE COUNCIL OF THE EUROPEAN UNION,
1.2. Request for an expiry review
(3) Following the publication of a notice of impending
Having regard to the Treaty on the Functioning of the European
expiry ( 5 ) of the definitive measures in force, the
Union,
Commission received a request for the initiation of an
expiry review of Council Regulation (EC) No 713/2005
pursuant to Articles 18(2) of the basic Regulation, from
Having regard to Council Regulation (EC) No 597/2009 of
two Union producers: DSM and Sandoz (the applicants),
11 June 2009 on protection against subsidised imports from
representing a major proportion, in this case more than
countries not members of the European Community (
50 % of the total Union production of certain broad

1 ), (the
basic Regulation), and in particular Article 18 thereof,
spectrum antibiotics.
Having regard to the proposal submitted by the European
Commission (the Commission) after consulting the Advisory
(4)
The request was based on the grounds that the expiry of
Committee,
the measures would be likely to lead to a continuation or
recurrence of subsidisation and injury to the Union
industry.
Whereas:
1. PROCEDURE
(5) Prior to the initiation of the expiry review, and in
accordance with Articles 10(9) and 22(1) of the basic
1.1. Measures in force
Regulation, the Commission notified the Government
(1) In
May
2005,
following
a
combined
expiry
and
interim
of India (the GOI) that it had received a properly docu
review (the combined review), the Council, by Regulation
mented review request. The GOI was invited for consul
(EC) No 713/2005 (
tations with the aim of clarifying the situation as regards

2 ), imposed a definitive countervailing
duty on imports of certain broad spectrum antibiotics,
the contents of the request and arriving at a mutually
namely amoxicillin trihydrate, ampicillin trihydrate and
agreed solution. The GOI responded only very late to this
cefalexin not put up in measured doses or in forms or
invitation and, therefore, no such consultations have
packing for retail sale (the product concerned) currently
taken place.
falling within CN codes ex
2941
10
00 and
ex 2941 90 00 originating in India. The measures took
the form of an ad valorem duty ranging from 17,3 % to
32 %. The original measures had been imposed by Regu
1.3. Initiation of an expiry review
lation (EC) No 2164/98 ( 3 ).
(6) Having
determined,
after
consulting
the
Advisory
Committee, that sufficient evidence existed for the
(2) Following
a
partial
interim
review,
the
Council,
by
Regu
initiation of an expiry review, the Commission
lation (EC) No 1176/2008 (
announced on 12 May 2010, by a notice published in

4 ), amended the counter
vailing duty rate applicable to one Indian exporter.
the Official Journal of the European Union ( 6 ) (the Notice of
initiation), the initiation of an expiry review pursuant to
Article 18 of the basic Regulation.
( 1 ) OJ L 188, 18.7.2009, p. 93.
( 2 ) OJ L 121, 13.5.2005, p. 1.
( 3 ) OJ L 273, 9.10.1998, p. 1.
( 5 ) OJ C 21, 28.1.2010, p. 40.
( 4 ) OJ L 319, 29.11.2008, p. 1.
( 6 ) OJ C 123, 12.5.2010, p. 11.

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L 206/2
EN
Official Journal of the European Union
11.8.2011
1.4. Investigation
(13) The
Commission
sought
and
verified
all
the
information
it deemed necessary for a determination of the likelihood
1.4.1. Investigation period
of continuation or recurrence of subsidisation and
resulting injury and of the Union interest. Verification
(7)
The investigation of continuation or recurrence of subsi
visits were carried out at the premises of the following
disation covered the period from 1 April 2009 to
interested parties:
31 March 2010 (‘the review investigation period’ or
‘RIP’). The examination of the trends relevant for the
assessment of the likelihood of a continuation or
(a) Union producers:
recurrence of injury covered the period from 1 January
2007 to the end of the review investigation period (the
period considered).
— DSM Anti-Infectives B.V., Delft (The Netherlands),
which also replied to the Commission’s ques
tionnaire on behalf of DSM Anti-Infectives
Chemferm S.A., Santa Perpetua de Mogoda,
1.4.2. Parties concerned by the investigation
(Spain). These two companies are hereafter
jointly referred to as ‘DSM’,
(8) The
Commission
officially
advised
the
applicants,
other
known Union producers, exporting producers, importers,
up-stream suppliers, users known to be concerned, and
— Deretil S.A. (formerly DSM Anti-Infectives Deretil
the GOI of the initiation of the expiry review. Interested
S.A.), Almeria, Spain, referred to as ‘Deretil’, and
parties were given the opportunity to make their views
known in writing and to request a hearing within the
time limit set out in the Notice of initiation.
— Sandoz GmbH, Kundl (Austria), which also
replied to the Commission’s questionnaire on
behalf of Sandoz Industrial Products S.A.,
Barcelona (Spain). Both companies are hereafter
(9) All
interested
parties,
who
so
requested
and
showed
that
jointly referred to as ‘Sandoz’;
there were particular reasons why they should be heard,
were granted a hearing.
(b) Exporting producers in India:
(10) In
view
of the
apparent
large
number of exporting
— Lupin Limited, Mumbai,
producers of the product concerned in India which
were named in the request, it was considered appropriate,
in accordance with Article 27 of the basic Regulation, to
— M/s Surya Pharmaceuticals Ltd, Chandigarh and
examine whether sampling should be used. In order to
Baddi, and
enable the Commission to decide whether sampling
would be necessary and, if so, to select a sample, the
above parties were requested, pursuant to Article 27 of
— Ranbaxy Laboratories Limited, Gurgaon;
the basic Regulation, to make themselves known within
15 days of the initiation of the review and to provide the
(c) Government of India (GOI):
Commission with the information requested in the
Notice of initiation. Only three exporting producers
came forward. Therefore, no sampling was applied.
— Ministry of Commerce, New Delhi.
2. PRODUCT CONCERNED AND LIKE PRODUCT
(11) The
Commission
sent
questionnaires
to
all
parties
known
to be concerned and to those who made themselves
(14) The
product
covered
by
this
review
is
the
same
product
known within the deadlines set in the Notice of
as the one concerned by Council Regulation (EC)
initiation. Replies were received from three Union
No 713/2005, namely amoxicillin trihydrate, ampicillin
producers, three exporting producers and the GOI.
trihydrate and cefalexin not put up in measured doses
None of the other producers replied to the questionnaire
or in forms or packing for retail sale currently falling
or supplied any information. None of the importers came
within CN codes ex 2941 10 00 and ex 2941 90 00
forward during the sampling exercise and no other
originating in India (the product concerned).
importers supplied the Commission with any
information or made themselves known in the course
of the investigation.
(15) The
investigation
confirmed
that,
as
in
the
previous
review investigation, the product concerned and the
products manufactured and sold by the exporting
producers on the domestic market in India, as well as
(12) One
of
the
producers
claimed
that
the
assessment
of
the
those manufactured and sold in the Union by the Union
situation of the Union industry should also include data
producers, have the same basic physical and technical
from another alleged Union producer. However, as it was
characteristics as well as the same uses and are, therefore,
found that this latter company was not a producer of the
considered to be like products within the meaning of
product under investigation, this claim was rejected.
Article 2(c) of the basic Regulation.

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EN
11.8.2011 Official
Journal
of
the
European
Union L
206/3
3. LIKELIHOOD OF CONTINUATION OR RECURRENCE
entered into force in August 2009. In addition, the GOI
OF SUBSIDISATION
also sets out the procedures governing FTP 04-09 and
FTP 09-14 in a ‘Handbook of Procedures, Volume I’
3.1. Introduction
(‘HOP I 04-09’ and ‘HOP I 09-14’ respectively). The
Handbook of Procedures is also updated on a regular
(16) As
mentioned
in
recital
11,
three
exporting
producers
basis.
came forward and completed a questionnaire reply.
However, only two of these three exporting producers
reported to have sales of the product concerned to the
(19) Scheme
(g)
is
based
on
sections
21
and
35A
of
the
Union during the RIP.
Banking Regulation Act 1949, which allow the Reserve
Bank of India (RBI) to direct commercial banks in the
field of export credits.
(17) On the basis of the information contained in the review
request and the replies to the Commission’s ques
tionnaire, the following schemes, which allegedly
(20) Scheme (h) is based on the Income Tax Act of 1961,
involve the granting of subsidies, were investigated:
which is amended by the yearly Finance Act.
(21) Scheme
(i)
is
administered
by
the
Government
of
Punjab
Nationwide schemes:
and is based on the industrial policy and incentives code
of the Government of Punjab.
(a) Advance Authorisation Scheme (AAS);
(22) Scheme (j) is administered by the Government of Gujarat
and is based on Gujarat’s industrial incentive policy.
(b) Duty Entitlement Passbook Scheme (DEPBS);
3.2. Advance Authorisation Scheme (AAS)
(c) Export Promotion Capital Goods Scheme (EPCGS);
(a) Legal basis
(23) The detailed description of the scheme is contained in
(d) Focus Market Scheme (FMS);
paragraphs 4.1.1 to 4.1.14 of FTP 04-09 and FTP 09-14
and paragraphs 4.1 to 4,30 A of HOP I 04-09 and HOP
I 09-14.
(e) Duty Free Import Authorisation (DFIA);
(b) Eligibility
(f) Export Oriented Units (EOU)/Export Processing
(24) The
AAS
consists
of
six
sub-schemes,
as
described
in
Zones (EPZ)/Special Economic Zones (SEZ);
more detail in recital 25. Those sub-schemes differ,
inter alia, in the scope of eligibility. Manufacturer-
exporters and merchant-exporters ‘tied to’ supporting
(g) Export Credit Scheme (ECS); and
manufacturers are eligible for the AAS physical exports
and for the AAS for annual requirement. Manufacturer-
exporters supplying the ultimate exporter are eligible for
AAS for intermediate supplies. Main contractors which
(h) Income Tax Exemption Scheme (ITES);
supply to the ‘deemed export’ categories mentioned in
paragraph 8.2 of FTP 04-09 and FTP 09-14, such as
suppliers of an export oriented unit (EOU), are eligible
Regional schemes:
for AAS deemed export. Eventually, intermediate
suppliers to manufacturer-exporters are eligible for
‘deemed export’ benefits under the sub-schemes
(i) Punjab Industrial Incentive Scheme; and
Advance Release Order (ARO) and back-to-back inland
letter of credit.
(j) Gujarat Industrial Incentive Scheme.
(c) Practical implementation
(25) Advance
authorisations
can
be
issued
for:
(18) The
schemes
(a)
to
(f)
specified
above
are
based
on
the
Foreign Trade (Development and Regulation) Act 1992
(No 22 of 1992) which entered into force on 7 August
(i) physical exports: this is the main sub-scheme. It
1992 (Foreign Trade Act). The Foreign Trade Act au
allows for duty free import of input materials for
thorises the GOI to issue notifications regarding the
the production of a specific resultant export
export and import policy. These are summarised in
product. ‘Physical’ in this context means that the
Foreign Trade Policy (FTP) documents, which are issued
export product has to leave Indian territory. An
by the Ministry of Commerce every 5 years and updated
import allowance and export obligation including
regularly. Two FTP documents are relevant to the RIP of
the type of export product are specified in the
this case, i.e. FTP 04-09 and FTP 09-14. The latter
advance authorisation;

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L 206/4
EN
Official Journal of the European Union
11.8.2011
(ii) annual requirement: such an andvance authorisation
letter of credit in favour of an indigenous supplier.
is not linked to a specific export product, but to a
The advance authorisation will be invalidated by the
wider product group (e.g. chemical and allied
bank for direct import only in respect of the value
products). The advance authorisation holder can —
and volume of items being sourced indigenously
up to a certain value threshold set by its past export
instead of importation. The indigenous supplier will
performance — import duty free any input to be
be entitled to the forecast export benefits as set out
used in manufacturing any of the items falling
in paragraph 8.3 of FTP 04-09 and FTP 09-14 (i.e.
under such a product group. It can choose to
AAS for intermediate supplies/deemed export,
export any resultant product falling under the
deemed export drawback and refund of terminal
product group using such duty-exempt material;
excise duty).
(iii) intermediate supplies: this sub-scheme covers cases
(26) During
the
RIP,
one
of
the
two
cooperating
exporters
where two manufacturers intend to produce a single
obtained concessions under AAS. The subschemes that
export product and divide the production process.
this company used was (i) physical exports. It is therefore
The manufacturer-exporter who produces the inter
not necessary to establish the countervailability of the
mediate product can import duty free input materials
remaining unused sub-schemes.
and can obtain for this purpose an AAS for inter
mediate supplies. The ultimate exporter finalises the
production and is obliged to export the finished
product;
(27) Imported
input
materials
are
not
transferable
and
have
to
be used to produce the resulting export product. The
export obligation must be fulfilled within a prescribed
(iv) deemed exports: this sub-scheme allows a main
time-frame after issuance of the advance authorisation.
contractor to import inputs free of duty which are
Since the combined review, it has been extended to 36
required in manufacturing goods to be sold as
months (24 months with two extensions of 6 months
‘deemed exports’ to the categories of customers
each).
mentioned in paragraph 8.2(b) to (f), (g), (i) and (j)
of FTP 04-09 and FTP 09-14. According to the GOI,
deemed exports refer to those transactions in which
the goods supplied do not leave the country. A
(28) For
verification
purposes
by
the
Indian
authorities,
an
number of categories of supply is regarded as
Advance Authorisation holder is legally obliged to
deemed exports provided the goods are manu
maintain an actual consumption register (true and
factured in India, e.g. supply of goods to an EOU
proper account) of duty free imported/domestically
or to a company situated in a SEZ;
procured goods against each advance authorisation, as
per prescribed format (paragraphs 4.26, 4.30 and
Appendix 23 HOP I 04-09 and HOP I 09-14). This
register has to be verified by an external chartered
(v) ARO: the advance authorisation holder intending to
accountant/cost and works accountant who issues a
source the inputs from indigenous sources, in lieu of
certificate stating that the prescribed registers and
direct import, has the option to source them against
relevant records have been examined and the information
AROs. In such cases, the advance authorisations are
furnished under Appendix 23 is true and correct in all
validated as AROs and are endorsed to the
respects.
indigenous supplier upon delivery of the items
specified therein. The endorsement of the ARO
entitles the indigenous supplier to the benefits of
deemed exports as set out in paragraph 8.3 of FTP
04-09 and FTP 09-14 (i.e. AAS for intermediate
(29) With
regard
to
the
use
of
AAS
for
physical
exports
supplies/deemed export, deemed export drawback
during the RIP, both the import allowance and the
and refund of terminal excise duty). The ARO
export obligation are fixed in volume and value by the
mechanism refunds taxes and duties to the supplier
GOI and are documented on the advance authorisation.
instead of refunding the same to the ultimate
In addition, at the time of import and of export, the
exporter in the form of drawback/refund of duties.
corresponding transactions are to be documented by
The refund of taxes/duties is available both for
government officials on the advance authorisation. The
indigenous inputs as well as imported inputs;
volume of imports allowed under this scheme is
determined by the GOI on the basis of standard input-
output norms (SIONs). SIONs exist for most products
including the product concerned and are issued by the
GOI. Since the combined review, the SIONs have been
(vi) back-to-back inland letter of credit: this sub-scheme
revised downwards and during the RIP they were, for the
again covers indigenous supplies to an Advance
main raw material input and depending on the product
Authorisation holder. The advance authorisation
and route, 2,3 % to 16,1 % lower than during the
holder can approach a bank for opening an inland
combined review.

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European
Union L
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(30) In spite of this lowering of the SIONs, it was found that
under Article 4(4), first subparagraph, point (a) of the
for one of the product types concerned, the actual
basic Regulation. Without an export commitment a
consumption was still below the SIONs. Furthermore, it
company cannot obtain benefits under this scheme.
was found that, although mandatory, the company did
not keep the consumption register referred to in recital
28 (Appendix 23), verifiable by an external accountant.
In spite of the breach of this requirement, the company
did avail the benefits under AAS which were moreover,
(36) This
expiry
review
has,
therefore,
confirmed
that
the
in view of the found overestimation of the SIONs, in
main sub-scheme used in the present case cannot be
excess of the legal provisions therefore.
considered as permissible duty drawback system or
substitution drawback system within the meaning of
Article 3(1)(a)(ii) of the basic Regulation. It does not
conform to the rules laid down in Annexes I (item (i)),
(d) Disclosure comments
II (definition and rules for drawback) and III (definition
and rules for substitution drawback) to the basic Regu
(31) The GOI and one exporting producer submitted
lation. Although a verification system or procedure to
comments on AAS.
confirm whether and in what amounts inputs were
consumed in the production of the exported product
(Annex II(II)(4) to the basic Regulation and, in the case
of substitution drawback schemes, Annex III(II)(2) to the
(32) The GOI claimed that AAS operates as a permitted
basic Regulation) does exist, the GOI did not effectively
drawback or substitution drawback system with a verifi
apply it. The SIONs themselves cannot be considered a
cation system in conformity with the provisions of
verification system of actual consumption, since they
Annexes I, II and III to the basic Regulation in place to
have been found to be overgenerous and it was estab
monitor the nexus between duty free imported inputs
lished that benefits received in excess are not reclaimed
and the resultant export products. The GOI further
by the GOI. Indeed, an effective control done by the GOI
contended that, according to the basic Regulation, only
based on a correctly kept actual consumption register did
the remission or drawback of import charges in excess of
not take place. In addition, the GOI did not carry out a
those levied on imported inputs that are consumed in the
further examination based on actual inputs involved,
production of exported products can be countervailed.
although this would normally need to be carried out in
With regard to a verification system, they insisted that
the absence of an effectively applied verification system
an adequate verification system was in place. In this
(Annex II(II)(5) and Annex III(II)(3) to the basic Regu
context they referred to a number of verification
lation). Finally, it has been confirmed that, although
elements which were available to the GOI for such verifi
mandatory by law, the involvement of chartered
cation, including SIONs, quantity information on import
accountants in the verification process is, in practice,
and export documents and redemption verification after
not guaranteed.
fulfilment of importation and exportation. The GOI also
recalled that the scheme prescribes that, if there is any
unutilised material, full duty is to be paid along with
interest.
(37) AAS
for
physical
exports
is
therefore
countervailable.
(33) The
exporting
producer
which
had
used
AAS
for
its
Union sales had no comments on the findings as
(f) Calculation of the subsidy amount
concerns description and practical implementation, as
summarised under sections (a) to (c), but it contested a
(38) In
the
absence
of
permitted
duty
drawback
system
or
number of figures in the calculation of the subsidy
substitution drawback system, the countervailable
amount. Whilst the calculation was checked and no
benefit is the remission of total import duties normally
corrections needed to be made, these issues were
due upon importation of inputs. In this respect and as to
clarified to the company concerned.
the claim of the GOI in recital 32, it is noted that the
basic Regulation does not only provide for the counter
vailing of an ‘excess’ remission of duties. According to
Article 3(1)(a)(ii) and Annex I(i) to the basic Regulation
(e) Conclusion
only an excess remission of duties can be countervailed,
provided the conditions of Annexes II and III to the basic
(34) The
exemption
from
import
duties
is
a
subsidy
within
Regulation are met. However, these conditions were not
the meaning of Article 3(1)(a)(ii) and Article 3(2) of the
fulfilled in the present case. Thus, if an absence of an
basic Regulation, i.e. a financial contribution of the GOI
adequate monitoring process is established, the above
which conferred a benefit upon the investigated exporter.
exception for drawback schemes is not applicable and
the normal rule for countervailing the amount of
(revenue forgone) unpaid duties, rather than any
purported excess remission, applies. As set out in
(35) In addition, AAS for physical exports is clearly
Annexes II(II) and III(II) to the basic Regulation the
contingent in law upon export performance, and
burden is not upon the investigating authority to
therefore deemed to be specific and countervailable
calculate such excess remission. To the contrary,

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Official Journal of the European Union
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according to Article 3(1)(a)(ii) of the basic Regulation it
authorities in India indicating that the export is taking
only has to establish sufficient evidence to refute the
place under the DEPBS. In order for the goods to be
appropriateness of an alleged verification system.
exported, the Indian customs authorities issue, during
the dispatch procedure, an export shipping bill. This
document shows, inter alia, the amount of DEPBS
credit which is to be granted for that export transaction.
(39) The
subsidy
amount
for
the
exporter
which
used
the
At this point in time, the exporter knows the benefit it
AAS was calculated on the basis of import duties
will receive. Once the customs authorities issue an export
forgone (basic customs duty and special additional
shipping bill, the GOI has no discretion over the granting
customs duty) on the material imported under the sub-
of a DEPBS credit. The relevant DEPBS rate to calculate
scheme used for the product concerned during the RIP
the benefit is that which applied at the time the export
(nominator). In accordance with Article 7(1)(a) of the
declaration was made. Therefore, there is no possibility
basic Regulation, fees necessarily incurred to obtain the
for a retroactive amendment to the level of the benefit.
subsidy were deducted from the subsidy amount where
justified claims were made. In accordance with
Article 7(2) of the basic Regulation, this subsidy
amount has been allocated over the export turnover
(45) It
was
found
that
in
accordance
with
Indian
accounting
generated by the product concerned during the RIP as
standards, DEPBS credits can be booked on an accrual
appropriate denominator, because the subsidy is
basis as income in the commercial accounts, upon
contingent upon export performance and was not
fulfilment of the export obligation. Such credits can be
granted by reference to the quantities manufactured,
used for payment of customs duties on subsequent
produced, exported or transported.
imports of any goods unrestrictedly importable, except
capital goods. Goods imported against such credits can
be sold on the domestic market (subject to sales tax) or
used otherwise. DEPBS credits are freely transferable and
(40) The
subsidy
rate
established
in
respect
of
this
scheme
valid for a period of 24 months from the date of issue.
during the RIP for the sole cooperating producer using
it amounts to 12,3 %.
(46) Applications
for
DEPBS
credits
are
electronically
filed
and
can cover an unlimited amount of export transactions.
3.3. Duty Entitlement Passbook Scheme (DEPBS)
De facto, no strict deadlines to apply for DEPBS credits
(a) Legal Basis
exist. The electronic system used to manage DEPBS does
not automatically exclude export transactions exceeding
(41) The detailed description of the DEPBS is contained in
the deadline submission periods mentioned in paragraph
paragraphs 4.3 of FTP 04-09 and FTP 09-14 as well as
4.47 of HOP I 04-09 and HOP I 09-14. Furthermore, as
in Chapter 4 of HOP I 04-09 and HOP I 09-14.
clearly provided in paragraph 9.3 of the HOP I 04-09
and HOP I 09-14, applications received after the expiry
of submission deadlines can always be considered with
the imposition of a minor penalty fee (i.e. 10 % of the
(b) Eligibility
entitlement).
(42) Any manufacturer-exporter or merchant-exporter is
eligible for this scheme.
(47) It
was
found that
one cooperating
Indian exporting
producer used this scheme during the RIP.
(c) Practical implementation
(43) An
eligible
exporter
can
apply
for
DEPBS
credits
which
(d) Disclosure comments
are calculated as a percentage of the value of products
exported under this scheme. Such DEPBS rates have been
(48) The
GOI
submitted
that
‘benefit
to
the
recipient’
can
be
established by the Indian authorities for most products,
measured and the countervailability of the subsidy can be
including the product concerned. They are determined on
determined only when DEPBS licenses are sold in the
the basis of SIONs (see recital 29) and the customs duty
market as they would only confer a benefit if and
incidence on the presumed import content, regardless of
when they are sold on the market. In other words,
whether import duties have actually been paid or not.
DEPBS credits would not be countervailable when they
The DEPBS rates for the product concerned during the
are used for payment of customs duty on the imported
RIP of the current investigation were 8 % for amoxicillin
goods which are used as inputs for the production of
trihydrate and 7 % for ampicillin trihydrate and cefalexin,
exported goods.
and therefore in all cases higher than during the
combined review.
(e) Conclusions on DEPBS
(44) To
be
eligible
for
benefits
under
this
scheme,
a
company
(49) The
DEPBS
provides
subsidies
within
the
meaning
of
must export. At the point in time of the export trans
Article 3(1)(a)(ii) and Article 3(2) of the basic Regulation.
action, a declaration must be made by the exporter to the
A DEPBS credit is a financial contribution by the GOI,

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since the credit will eventually be used to offset import
(55) In
accordance
with
Article
7(2)
of
the
basic
Regulation
duties, thus decreasing the GOI’s duty revenue which
these subsidy amounts have been allocated over the total
would be otherwise due. In addition, the DEPBS credit
export turnover during the review investigation period as
confers a benefit upon the exporter, because it improves
appropriate denominator, because the subsidy is
its liquidity not only if a license is sold on the market, as
contingent upon export performance and it was not
was claimed by the GOI, but also if it is used for
granted by reference to the quantities manufactured,
payment of customs duty on imported goods.
produced, exported or transported.
(50) Furthermore, the DEPBS is contingent in law upon
(56) Based on the above, the subsidy rate established in
export performance, and is therefore deemed to be
respect of this scheme for the cooperating exporting
specific and countervailable under Article 4(4), first
producer using it during the RIP amounts to 6,9 %.
subparagraph, point (a) of the basic Regulation.
3.4. Export Promotion Capital Goods scheme
(51) This
scheme
cannot
be
considered
as
permissible
duty
(EPCGS)
drawback system or substitution drawback system
within the meaning of Article 3(1)(a)(ii) of the basic
(a) Legal basis
Regulation. It does not conform to the strict rules laid
down in Annex I item (i), Annex II (definition and rules
(57) The detailed description of EPCGS is contained in
Chapter 5 of FTP 04-09 and FTP 09-14 as well as in
for drawback) and Annex III (definition and rules for
Chapter 5 of HOP I 04-09 and HOP I 09-14.
substitution drawback) to the basic Regulation. An
exporter is under no obligation to actually consume
the goods imported free of duty in the production
process and the amount of credit is not calculated in
(b) Eligibility
relation to actual inputs used. Moreover, there is no
(58) Manufacturer-exporters, merchant-exporters ‘tied to’
system or procedure in place to confirm which inputs
supporting manufacturers and service providers are
are consumed in the production process of the exported
eligible for this scheme.
product or whether an excess payment of import duties
occurred within the meaning of item (i) of Annex I and
Annexes II and III to the basic Regulation. Lastly, an
(c) Practical implementation
exporter is eligible for the DEPBS benefits regardless of
whether it imports any inputs at all. In order to obtain
(59) Under
the
condition
of
an
export
obligation,
a
company
the benefit, it is sufficient for an exporter to simply
is allowed to import capital goods (new and second-hand
export goods without demonstrating that any input
capital goods up to 10 years old) at a reduced rate of
material was imported. Thus, even exporters which
duty. To this end, the GOI issues, upon application and
procure all of their inputs locally and do not import
payment of a fee, an EPCGS licence. The scheme provides
any goods which can be used as inputs are still entitled
for a reduced import duty rate of 5 % applicable to all
to benefit from the DEPBS.
capital goods imported under the scheme. In order to
meet the export obligation, the imported capital goods
must be used to produce a certain amount of export
(f) Calculation of the subsidy amount
goods during a certain period. Under FTP 09-14 the
capital goods can be imported with 0 % duty rate
(52) In
accordance
with
Articles
3(2)
and
5
of
the
basic
Regu
under EPCGS but in such case the time period for
lation, the amount of countervailable subsidies was
fulfilment of the export obligation is shorter.
calculated in terms of the benefit conferred on the
recipient, which is found to exist during the review inves
tigation period. In this regard, it was considered that the
(60) The
EPCGS
licence
holder
can
also
source
the
capital
benefit is conferred on the recipient at the point in time
goods indigenously. In such case, the indigenous manu
when an export transaction is made under this scheme.
facturer of capital goods may avail himself of the benefit
At this moment, the GOI is liable to forego the customs
for duty free import of components required to manu
duties, which constitutes a financial contribution within
facture such capital goods. Alternatively, the indigenous
the meaning of Article 3(1)(a)(ii) of the basic Regulation.
manufacturer can claim the benefit of deemed export in
respect of supply of capital goods to an EPCGS licence
holder.
(53) In light of the above, it is considered appropriate to
assess the benefit under the DEPBS as being the sum
of the credits earned on all export transactions made
(61) It
was
found
that
both
cooperating
exporting
producers
under this scheme during the RIP.
used this scheme during the RIP.
(54) Where justified claims were made, fees necessarily
(d) Disclosure comments
incurred to obtain the subsidy were deducted from the
credits so established to arrive at the subsidy amounts as
(62) Upon disclosure the GOI contested the countervailability
numerator, pursuant to Article 7(1)(a) of the basic Regu
of EPCGS. In particular, it claimed that EPCGS subsidies
lation.
with regard to the purchase of capital goods where the

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L 206/8
EN
Official Journal of the European Union
11.8.2011
export obligation was already fulfilled before the RIP,
period of such capital goods in the industry concerned.
should not anymore be treated as contingent upon
Interests were added to this amount in order to reflect
export performance. One exporting producer which
the full value of the benefit over time. The commercial
was found to have received EPCGS subsidies claimed
interest rate for local currency loans during the review
that these subsidies should not have been taken into
investigation period in India was considered appropriate
account as they would not have been used for purchasing
for this purpose.
capital goods used for the production of the product
concerned.
(67) In
accordance
with
Article
7(2)
and
7(3)
of
the
basic
Regulation this subsidy amount has been allocated over
the export turnover during the RIP as appropriate
(e) Conclusion on EPCGS
denominator, because the subsidy is contingent upon
export performance.
(63) The
EPCGS
provides
subsidies
within
the
meaning
of
Article 3(1)(a)(ii) and Article 3(2) of the basic Regulation.
The duty reduction constitutes a financial contribution by
(68) The
subsidy
rate
established
in
respect
of
this
scheme
for
the GOI, since this concession decreases the GOI’s duty
the cooperating exporting producers during the RIP
revenue which would be otherwise due. In addition, the
amounts to 0,1 % — 0,5 %.
duty reduction confers a benefit upon the exporter,
because the duties saved upon importation improve the
company’s liquidity.
3.5. Focus Market Scheme (FMS)
(a) Legal basis
(64) The
claim that EPCGS subsidies with regard to the
(69) The detailed description of FMS is contained in
purchase of capital goods where the export obligation
paragraphs 3.9.1 to 3.9.2.2 of FTP 04-09 and paragraphs
was already fulfilled before the RIP would not anymore
3.14.1 to 3.14.3 of FTP 09-14 and in paragraphs 3.20 to
be contingent upon export performance has to be
3.20.3 of HOP I 04-09 and paragraphs 3.8 to 3.8.2 of
rejected. Indeed, it is not contested that EPCGS is
HOP I 09-14.
contingent in law upon export performance, since such
EPCGS licences cannot be obtained without a
commitment to export. Therefore it is deemed to be
(b) Eligibility
specific and countervailable under Article 4(4), first
subparagraph, point (a) of the basic Regulation. The
(70) Any manufacturer-exporter or merchant-exporter is
moment in time where the export obligation would
eligible for this scheme.
actually be fulfilled is irrelevant in that respect. As
concerns the issue as to whether or not the capital
goods are used for the production of the product
(c) Practical implementation
concerned, according to Chapter 5.2 of FTP 09-14, the
EPCGS allows imports of capital goods for pre
(71) Under this scheme exports of all products to countries
production, production and post production (including
notified under Appendix 37(C) of HOP I 04-09 and HOP
complete knock-down (CKD)/semi knock-down (SKD)
I 09-14 are entitled to duty credit equivalent to 2,5 % of
thereof as well as computer software systems). It is
the FOB value of products exported under this scheme.
therefore clear that also goods not used for the
Certain type of export activities are excluded from the
production of the product concerned can benefit from
scheme, e.g. exports of imported goods or transhipped
EPCGS. In addition, it was established that the export
goods, deemed exports, service exports and export
obligation under EPCGS was fulfilled using exports of
turnover of units operating under special economic
the product concerned. The claim is therefore rejected.
zones/export operating units. Also excluded from the
scheme are certain types of products, e.g. diamonds,
precious metals, ores, cereals, sugar and petroleum
products.
(65) EPCGS cannot be considered a permissible duty
drawback system or substitution drawback system
within the meaning of Article 3(1)(a)(ii) of the basic
(72) The duty credits under FMS are freely transferable and
Regulation. Capital goods are not covered by the scope
valid for a period of 24 months from the date of issue of
of such permissible systems, as set out in Annex I,
the relevant credit entitlement certificate. They can be
item (i), of the basic Regulation, because they are not
used for payment of custom duties on subsequent
consumed in the production of the exported products.
imports of any inputs or goods including capital goods.
(73) The
credit
entitlement
certificate
is
issued
from
the
port
(f) Calculation of the subsidy amount
from which the exports have been made and after real
isation of exports or shipment of goods. As long as the
(66) The
subsidy
amount
was
calculated,
in
accordance
with
applicant provides to the authorities copies of all relevant
Article 7(3) of the basic Regulation, on the basis of the
export documentation (e.g. export order, invoices,
unpaid customs duty on imported capital goods spread
shipping bills, bank realisation certificates), the GOI has
across a period which reflects the normal depreciation
no discretion over the granting of the duty credits.

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EN
11.8.2011 Official
Journal
of
the
European
Union L
206/9
(d) Disclosure comments
order to import capital goods although capital goods are
not covered by the scope of permissible duty drawback
(74) After disclosure the GOI submitted that until the credit
systems, as set out in Annex I, point (i), to the basic
entitlement certificate is sold on the market, it would
Regulation, because they are not consumed in the
confer no benefit whatsoever to the recipient and,
production of the exported products.
therefore, it would not be countervailable. It was
claimed that FMS duty credits would not be counter
vailable when they are used for payment of customs
duty on the imported goods which are used as inputs
(f) Calculation of the subsidy amount
for the production of exported goods. The cooperating
exporting producer which had availed benefits under FMS
(78) The
amount
of
countervailable
subsidies
was
calculated
argued that the scheme is geographically related to other
in terms of the benefit conferred on the recipient, which
countries and, therefore, cannot be countervailed by the
is found to exist during the RIP as booked by the coop
Union.
erating exporting producer using the scheme on an
accrual basis as income at the stage of export transaction.
In accordance with Article 7(2) and 7(3) of the basic
Regulation this subsidy amount (nominator) has been
(e) Conclusion on FMS
allocated over the export turnover during the RIP as
appropriate denominator, because the subsidy is
(75) The FMS
provides subsidies within the meaning of
contingent upon export performance and it was not
Article 3(1)(a)(ii) and Article 3(2) of the basic Regulation.
granted by reference to the quantities manufactured,
A FMS duty credit is a financial contribution by the GOI,
produced, exported or transported.
since the credit will eventually be used to offset import
duties, thus decreasing the GOI’s duty revenue which
would be otherwise due. In addition, regardless as to
whether the credit entitlement certificate is used for
(79) The
subsidy
rate
established
with
regard
to
this
scheme
offsetting import duties or sold on the market, the
during the RIP for the cooperating exporting producer
FMS duty credit confers a benefit upon the exporter,
using the scheme amounts to < 0,1 %.
because it improves its liquidity.
3.6. Duty Free Import Authorisation (DFIA)
(76) Furthermore,
FMS
is
contingent
in
law
upon
export
performance, and therefore deemed to be specific and
(80) In the course of the investigation it was found that the
countervailable under Article 4(4), first subparagraph,
cooperating Indian producers did not obtain any benefits
point (a) of the basic Regulation. The fact that Union
under DFIA during the RIP. It was therefore not
countries are not covered under FMS does not contradict
necessary to further analyse this scheme in this investi
either the practical implementations of the scheme nor
gation.
the way the FMS benefit is used, as stated under recitals
72 to 74. Therefore, this claim had to be rejected.
3.7. Export Oriented Units (EOU)/Export Processing
Zones (EPZ)/Special Economic Zones (SEZ)
(77) This
scheme
cannot
be
considered
a
permissible
duty
drawback system or substitution drawback system
(81) In the course of the investigation it was found that the
within the meaning of Article 2(1)(a)(ii) of the basic
cooperating Indian producers did not obtain any benefits
Regulation. It does not conform to the strict rules laid
under EOU/EPZ/SEZ during the RIP. It was therefore not
down in Annex I, point (i), Annex II (definition and rules
necessary to further analyse these schemes in this inves
for drawback) and Annex III (definition and rules for
tigation.
substitution drawback) to the basic Regulation. An
exporter is under no obligation to actually consume
the goods imported free of duty in the production
process and the amount of credit is not calculated in
3.8. Export Credit Scheme (ECS)
relation to actual inputs used. There is no system or
(a) Legal basis
procedure in place to confirm which inputs are

consumed in the production process of the exported
(82) The
details
of
the
scheme
are
set
by
in
Master
Circular
on
product or whether an excess payment of import
Rupee/Foreign Currency Export Credit & Customer
duties occurred within the meaning of Annex I, point
Services to Exporters DBOD No DIR.(Exp). BC
(i), and Annexes II and III to the basic Regulation. An
07/04.02.02/2009-10 of the RBI, which is addressed to
exporter is eligible for FMS benefits regardless of whether
all commercial banks in India.
it imports any inputs at all. In order to obtain the
benefit, it is sufficient for an exporter to simply export
goods without demonstrating that any input material was
imported. Thus, even exporters which procure all of their
(b) Eligibility
inputs locally and do not import any goods which can be
used as inputs are still entitled to benefit from FMS.
(83) Manufacturing exporters and merchant exporters are
Moreover, an exporter can use FMS duty credits in
eligible for this scheme.

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L 206/10
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Official Journal of the European Union
11.8.2011
(c) Practical implementation
of Article 3(1)(a) of the basic Regulation. The RBI is a
public body and falls therefore under the definition of a
(84) Under
this
scheme,
the
RBI
mandatorily
sets
maximum
‘government’ as set out in Article 2(b) of the basic Regu
ceiling interest rates applicable to export credits, both in
lation. It is 100 % government-owned, pursues public
Indian rupees or in foreign currency, which commercial
policy objectives, e.g. monetary policy, and its
banks can charge an exporter. The ECS consists of two
management is appointed by the GOI. The RBI directs
sub-schemes, the Pre-Shipment Export Credit Scheme
private bodies, within the meaning of the second indent
(packing credit), which covers credits provided to an
of Article 3(1)(a)(iv) of the basic Regulation, since the
exporter for financing the purchase, processing, manu
commercial banks are bound by the conditions it
facturing, packing and/or shipping of goods prior to
imposes, inter alia, with regard to the maximum
export, and the Post-Shipment Export Credit Scheme,
ceilings for interest rates on export credits mandated in
which provides for working capital loans with the
the RBI Master Circular and the RBI provisions that
purpose of financing export receivables. The RBI also
commercial banks have to provide a certain amount of
directs the banks to provide a certain amount of their
their net bank credit towards export finance. This
net bank credit towards export finance.
direction obliges commercial banks to carry out
functions mentioned in Article 3(1)(a)(i) of the basic
Regulation, in this case loans in the form of preferential
export financing. Such direct transfer of funds in the
form of loans under certain conditions would normally
be vested in the government, and the practice, in no real
(85) As
a
result
of
the
RBI
Master
Circular,
exporters
can
sense, differs from practices normally followed by
obtain export credits at preferential interest rates
governments, within the meaning of Article 3(1)(a)(iv)
compared with the interest rates for ordinary commercial
of the basic Regulation. This subsidy is deemed to be
credits (cash credits), which are set purely under market
specific and countervailable since the preferential
conditions. The difference in rates might decrease for
interest rates are only available in relation to the
companies with good credit ratings. In fact, high rating
financing of export transactions and are therefore
companies might be in a position to obtain export
contingent upon export performance, pursuant to
credits and cash credits at the same conditions.
Article 4(4)(a) of the basic Regulation.
(d) Conclusion on ECS
(e) Calculation of the subsidy amount
(86) The
preferential
interest
rates
of
an
ECS
credit
set
by
the
RBI Master Circular mentioned in recital 85 can decrease
(88) The
subsidy
amount
has
been
calculated
on
the
basis
of
interest costs of an exporter as compared with credit
the difference between the interest paid for export credits
costs purely set by market conditions and confer in
used during the RIP and the interest rate that would have
this case a benefit in the meaning of Article 3(2) of
been payable for ordinary commercial credits used by the
the basic Regulation on such exporter. Export financing
sole cooperating exporting producer using the scheme.
is not per se more secure than domestic financing. In
This subsidy amount (nominator) has been allocated over
fact, it is usually perceived as being more risky and the
the total export turnover during the RIP as appropriate
extent of security required for a certain credit, regardless
denominator in accordance with Article 7(2) of the basic
of the finance object, is a purely commercial decision of
Regulation, because the subsidy is contingent upon
a given commercial bank. Rate differences with regard to
export performance and it was not granted by
different banks are the result of the methodology of the
reference to the quantities manufactured, produced,
RBI to set maximum lending rates for each commercial
exported or transported.
bank individually. In addition, commercial banks would
not be obliged to pass through to borrowers of export
financing any more advantageous interest rates for export
credits in foreign currency.
(89) The
subsidy
rate
established
with
regard
to
this
scheme
for the RIP for the cooperating exporting producer using
the scheme was negligible.
(87) Despite the fact that the preferential credits under the
ECS are granted by commercial banks, this benefit is a
financial contribution by a government within the
meaning of Article 3(1)(a)(iv) of the basic Regulation.
In this context, it should be noted that neither
3.9. Income Tax Exemption Scheme (ITES)
Article 3(1)(a)(iv) of the basic Regulation nor the ASCM
require a charge on the public accounts, e.g. reim
(90) In the course of the investigation it was found that the
bursement of the commercial banks by the GOI, to
cooperating Indian producers did not obtain any benefits
establish a subsidy, but only government direction to
under ITES during the RIP. It was therefore not necessary
carry out functions illustrated in points (i), (ii) or (iii)
to further analyse this scheme in this investigation.

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EN
11.8.2011 Official
Journal
of
the
European
Union L
206/11
3.10. Punjab Industrial Incentive Scheme
4. UNION PRODUCTION
(91) In the course of the investigation it was found that the
(100) During the review investigation period, the like product
cooperating Indian producers did not obtain any benefits
was manufactured in the Union by the following Union
under the Punjab Industrial Incentive Scheme during the
producers: Sandoz, DSM, Deretil, ACS Dobfar SpA and
RIP. It was therefore not necessary to further analyse this
Antibioticos S.A.. The applicants requested an expiry
scheme in this investigation.
review of the anti-subsidy measures in force. All
available information concerning Union producers,
3.11. Gujarat Industrial Incentive Scheme
including information provided in the request and data
collected from Union producers before and after the
(92) In the course of the investigation it was found that the
initiation of the review investigation, was used in order
cooperating Indian producers did not obtain any benefits
to establish the total Union production. On that basis,
under the Gujarat Industrial Incentive Scheme during the
the estimated total Union production during the RIP was
RIP. It was therefore not necessary to further analyse this
7 093 tonnes.
scheme in this investigation.
(101) The Union producers accounting for the total Union
3.12. Amount of countervailable subsidies
production constitute the Union industry within the
(93) The
amount
of
countervailable
subsidies
determined
in
meaning of Article 9(1) of the basic Regulation and are
accordance with the provisions of the basic Regulation,
hereafter referred to as the ‘Union industry’. Since the like
expressed ad valorem, for the investigated exporting
product produced by the three Union producers who
producers range between 7,5 % and 12,4 %. These
submitted a questionnaire response during the RIP repre
amounts of subsidisation exceed the de minimis
sented up to 95 % of the total Union production of the
threshold mentioned under Article 14(5) of the basic
like product, these producers’ data are considered to be
Regulation.
representative of the entire Union industry.
(94) It
is
therefore
considered
that,
pursuant
to
Article
18
of
5. SITUATION ON THE UNION MARKET
the basic Regulation, subsidisation continued during the
RIP.
5.1. Preliminary remark
3.13. Conclusions on the likelihood of continuation
(102) To analyse the import volumes and price trends, the
Eurostat import statistics for TARIC codes
or recurrence of subsidisation
2941 10 10 10, 2941 10 20 10 and 2941 90 00 30 for
(95) In
accordance
with
Article
18(2)
of
the
basic
Regulation,
the years 2007 and 2008 and TARIC codes
it was examined whether the expiry of the measures in
2941 10 00 10 and 2941 90 00 30 for the year 2009
force would be likely to lead to a continuation or
and onwards, as applicable during the period considered,
recurrence of subsidisation.
were used.
(96) In
this respect,
it is recalled that only two known
(103) Taking into account the number of Union producers and
exporting producers of the product concerned coop
the fact that one Union producer was producing the like
erated. From the available Indian and Union statistical
product under a tolling agreement with another one, the
information the share of these exporters in the total
information concerning the Union industry, where
Union sales of Indian exporting producers of the
necessary, has been shown in indices or in ranges only,
product concerned cannot be established. However,
in order to protect confidentiality of data.
those statistical data would suggest that there are other
producers which could sell the product concerned to the
Union.
5.2. Consumption in the Union market


(104) The like product is sold by the Union industry to
(97) It was established that during the RIP, the cooperating
unrelated customers and sold/transferred to related
exporting producers continued to benefit from counter
companies for further downstream processing.
vailable subsidisation by the Indian government. The
subsidy schemes analysed above give recurring benefits
and there are no indications that these programmes
(105) Sales to unrelated entities were considered to form the
would be phased out or modified in the foreseeable
‘free market’. Sales/transfers to related entities were
future or that the cooperating exporting producers
considered as ‘captive use’.
would stop obtaining benefits under these schemes.
(106) In calculating the apparent Union consumption of the
(98) There
is
no
information
available
which
would
indicate
product concerned and the like product, the Commission
that the other exporting producers would not continue
added:
to benefit from the subsidy schemes analysed above. It is
therefore concluded that the subsidisation at the country-
wide level continued.
— the volume of total imports of the product under
investigation into the Union as reported by Eurostat,
(99) In view of the findings described above it is concluded
that subsidisation continued during the RIP and would be
— the volume of sales of the like product in the Union
likely to continue in the future.
produced by the Union industry,

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L 206/12
EN
Official Journal of the European Union
11.8.2011
— the volume of captive use of the like product by the
Average import price
Union industry, and
(EUR/tonne)
2007 2008 2009 RIP
Product concerned
35 616 37
443 30
894 30
044
— the estimated sales of the like product in the Union
imports under inward
by other known Union producers.
processing regime
Index 100 105 87 84
(107) It should be noted that, in order to avoid double-
counting of sales volumes, the sales made under a
tolling agreement between two Union producers were
excluded from the above calculation.
(111) The average import price of the product concerned from
India for free circulation increased by 34 % between
2007 and 2009, then sharply dropped in the RIP, to
(108) On the above basis, the Union consumption of the
reach a level 26 % lower than in 2007. Also prices of
product concerned and the like product gradually
imports under inward processing regime followed a
increased by 28 % during the period considered:
downward trend and decreased by 16 % over the
period considered. The different price trends between
the two import regimes can be explained by the
Consumption (in tonnes) 2007 2008 2009 RIP
different type of the product concerned that was
Product concerned and 6 601 7
021 7
783 8
423
mainly imported, i.e. cefalexin, which is comparatively
like product
more expensive than other types.
Index 100 106 118 128
Market share of imports from
India
2007 2008 2009 RIP
Product concerned, imports 0,5 % 0,2
% 0,0
% 0,0
%
5.3. Imports from India
for free circulation
5.3.1. Volume, market share and prices of imports from India
Index 100 46
5
3
Imports (in tonnes) 2007 2008 2009 RIP
Product concerned imports 0,7 % 0,1
% 0,2
% 0,2
%
under inward processing
Product concerned imports 32,6 16,1 1,9 1,4
regime
for free circulation
Index 100
8 29 25
Index 100 49
6
4
Product concerned imports 45,5 3,7 15,5 14,5
under inward processing
(112) The market share of imports from India for free circu
regime
lation or made under inward processing regime was very
low over the period considered and decreased in both
Index 100
8 34 32
cases.
(113) One Union producer indicated that Indian imports,
which were based on Eurostat data, had been wrongly
(109) According to Eurostat data, the volume of imports of the
product concerned from India for free circulation has
estimated as Indian export statistics show higher export
decreased by 96 % during the period considered. A
volumes than those stated by Eurostat. In this regard, it
considerable drop by 51 percentage points has been
should be noted that it is the Commission’s standard
observed in 2008 then followed by a further decrease
practice to use Eurostat as a basis for import statistics.
by 43 percentage points in 2009 and two percentage
It is further noted that Indian export statistics do not
points in the RIP.
indicate the final destination of the exports and

whether they will actually enter the Union. This claim
had therefore to be rejected.
(110) A slightly different trend could be observed for imports
under inward processing regime which are free from
5.3.2. Price undercutting
countervailing and custom duties. After an initial fall in
imports by 92 % between 2007 and 2008, imports
(114) In view of the extremely low quantity of imports from
increased in 2009 and remained relatively stable in the
India that entered the Union market for free circulation,
RIP.
no meaningful conclusion could be drawn in regard to

price undercutting. In regard to the imports under the
inward processing regime, the undercutting margin found
Average import price
was negative. However, these imports amounted to less
(EUR/tonne)
2007 2008 2009 RIP
than 10 tonnes and concerned only one product type
(cefalexin), which is also the most expensive and less
Product concerned
25 863 28
934 34
758 19
200
represented product type on the market. Therefore, it
imports for free circu
was concluded that the transaction data concerning
lation
imports under the inward processing regime were not
Index 100 112 134 74
representative for the purpose of a meaningful under
cutting calculation and not suitable for further analysis.

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EN
11.8.2011 Official
Journal
of
the
European
Union L
206/13
(115) One Union producer indicated that a segregated analysis
Average import price per
of the two categories of imports, i.e. for free circulation
tonne (EUR)
2007 2008 2009 RIP
and under the inward processing regime, was not in line
with the approach of the previous review proceeding and
Other third countries 38
324 35
987 45
628 46
938
was also contrary to consistent Commission practice.
Index 100 94 119 122
Total 39
020 32
953 25
193 22
385
(116) In this regard, it should be noted that as concluded in
recital 115, quantities imported either under the inward
Index 100 84 65 57
processing regime or for free circulation were not
sufficient to allow meaningful conclusions to be drawn.
Considering the low level of the aggregated volume, this
(118) Average import prices from third countries have
conclusion equally applies to that volume.
decreased significantly by 43
% over the period
considered. Although the prices of the main exporting
countries (Singapore, China and Oman) undercut the
5.4. Imports from other third countries
Union prices by around 20 % in the RIP on a product
per product basis and the import volumes can be
Third country imports 2007 2008 2009 RIP
regarded as significant, such low priced imports did
apparently not affect the profitability of the Union
Volume (tonnes)
industry.
Singapore 1
557,7 1
448,2 2
030,5 2
425,3
(119) One Union producer claimed that the analysis of the
Index 100 93 130 156
average import price trends should have taken account
of the various product types. In this regard, it should be
China 487,6 622,5 1
176,9 1
234,7
noted that, in line with standard practice, the analysis of,
Index 100 128 241 253
inter alia, price trends has to be made on the basis of the
product concerned regardless of the share of each
Oman 373,4 438,5 301,7 287,9
product type. It is further noted that, in this case, no
conclusion was drawn from the trend in import prices
Index 100 117 81 77
from third countries over the period considered. The
above claim therefore had to be rejected.
Other third
67,8 327,5 74,2 73,2
countries
(120) All Union producers claimed that imports from, inter
Index 100 483 109 108
alia, China and Oman are mainly of amoxicillin
trihydrate for veterinary use and this should have been
Total 2
486,5 2
836,7 3
583,3 4
021,1
taken into account in the analysis of the above prices. In
Index 100 114 144 162
this regard, it is noted that the product under review
covers antibiotics for both human and veterinary
consumption. Furthermore, the information provided in
support of this allegation was not substantiated.
(117) Imports of the product under review from countries
Therefore, the above claim had to be rejected.
other than India increased by 62 % during the period
considered, with market share surging by more than
10 percentage points from 37,6 % to 47,7 %, which
(121) One Union producer questioned the basis on which price
coincided with the increased consumption on the
comparisons for amoxicillin trihydrate and ampicillin
Union market. Among exporting countries, Singapore,
trihydrate were made in the RIP given the fact that
China and Oman have been the major suppliers on the
Eurostat data does not distinguish between these two
Union market.
product types. In this regard, as it was found that the
Union industry’s prices of these two product types were
similar, it was not unreasonable to make an aggregate
price comparison.
Average import price per
tonne (EUR)
2007 2008 2009 RIP
Singapore 44
218 36
590 27
007 22
485
(122) As far as imports from Singapore are concerned, all
Union producers claimed that they were made at
Index 100 83 61 51
transfer price between related parties. In these circum
stances, to include these imports would distort the
China 29
515 26
622 21
224 20
683
average prices from other third countries. It is noted
that, if these imports were to be excluded from the
Index 100 90 72 70
price comparison, the above mentioned finding with
regard to the undercutting margin would not change
Oman 29
875 27
665 23
440 22
597
significantly and the conclusion that the low priced
Index 100 93 78 76
imports did not affect the profitability of the Union
industry would remain valid.

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L 206/14
EN
Official Journal of the European Union
11.8.2011
5.5. Economic situation of the Union industry
5.5.2. Sales volume, sales price, market share
(123) For the following economic indicators relating to the
5.5.2.1. F r e e m a r k e t s a l e s
Union industry, it was found that a meaningful analysis
and evaluation had to focus on the situation prevailing
Sales to unrelated parties in
on the free market: sales volume and sales prices on the
the Union
2007 2008 2009 RIP
Union market, market share and profitability. Where
possible and justified, these findings were subsequently
Index volume 100 97 93 99
compared with the data for the captive market, in order
to provide a full picture of the situation of the Union
Index average sales price 100 121 104 104
industry.
Index market share 100 90 79 78
(124) As regards other economic indicators, however, it was
(129) The Union industry’s sales volume to unrelated parties in
found on the basis of the investigation, that they could
the RIP was slightly below the level of 2007, dropping
reasonably be examined only by referring to the whole
by 7 % in 2009 and then increasing by six percentage
activity. Indeed, production (for both the captive and the
points during the RIP.
free market), capacity, capacity utilisation, inventories,
investments, stocks, employment, productivity, wages,
growth, ability to raise capital depend upon the whole
(130) The average sales price of the Union industry on the
activity, whether the production is captive or sold on the
Union market increased by 4
% over the period
free market.
considered. Prices first increased sharply by 21 % in
2008 before dropping by 17 percentage points in
2009 and remaining stable in the RIP.
(125) Following comments received from one Union producer
on the final disclosure of the facts and considerations on
the basis of which it was proposed to terminate the
(131) One Union producer claimed that the price impact of
proceeding, some of the economic indicators in the
imports from India on the Union industry was not
following recitals have been corrected. These changes
correctly assessed. In this regard, it is first of all noted
were not of a nature to change the conclusion with
that no undercutting was found as mentioned in recital
regard to the situation of the Union industry.
115. Additionally, as indicated in the preceding recital,
Union industry prices increased by 4 % over the period
considered. In these circumstances it is considered that
imports from India did not have any negative effect on
5.5.1. Production, capacity and capacity utilisation
the situation of the Union industry.

2007 2008 2009 RIP
(132) Decreasing sales on the Union market to unrelated
Index capacity 100 100 104 107
parties were reflected in the development of the market
share which dropped by 22 percentage points in the RIP
Index production 100 95 96 98
compared to 2007.
Index capacity utilisation 100 95 92 91
5.5.2.2. C a p t i v e m a r k e t
(126) The Union industry’s production capacity was stable
between 2007 and 2008 before increasing by 4 %
Captive market in the Union 2007 2008 2009 RIP
from 2008 to 2009 and by a further 3 percentage
points in the RIP.
Index volume 100 115 122 128
Index average sales price
100 100 111 110
of captive sales
(127) However, the production volume did not follow this
Index market share 100 109 104 100
increase due to unforeseen technical difficulties of one
Union producer in 2008, when production volume
dropped by 5 % and recovered gradually until the RIP.
(133) While Union industry’s sales volume to unrelated parties
was decreasing despite increasing demand during the
period considered, captive sales increased by 28 %.
(128) As a result of the increase in production capacity
combined with a small fall in production, the capacity
utilisation rate continually dropped in the period
(134) The market share of the captive market of the Union
considered and reached a level in the RIP that was 9 %
industry increased by 9 percentage points in 2008
below that in 2007.
before decreasing progressively to the 2007 level.

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EN
11.8.2011 Official
Journal
of
the
European
Union L
206/15
5.5.2.3. M a r k e t
s h a r e
o f
t h e
U n i o n
5.5.4.2. P r o f i t a b i l i t y o f c a p t i v e s a l e s
i n d u s t r y / G r o w t h
Profitability of captive sales 2007 2008 2009 RIP
Sales to unrelated parties,
captive sales and captive use
2007 2008 2009 RIP
Index 100 55 153 151
Index volume 100 107 108 114
Index market share 100 100 92 90
(140) The profitability of Union industry’s captive sales on the
Union market improved by 51 % during the RIP. This
development is largely explained by an average increase
in prices of 10 %. However, since this price trend is
(135) Market share of the Union industry as a whole was
based on transfer prices, no meaningful conclusion
measured by adding free and captive market volumes
should be drawn from the above.
in the Union. Although this volume increased over the
period considered by 14 %, the market share of the
Union industry decreased by 10 percentage points as
market consumption increased by 28 % over the same
5.5.5. Investments, return on investment, cash flow and the
period. This indicates that the Union industry did not
ability to raise capital
benefit from the growth in consumption.
2007 2008 2009 RIP
5.5.3. Inventories
Index investments 100 246 342 129
Stocks 2007 2008 2009 RIP
Index return on
100 233 52 62
investment
Index volume 100 74 63 46
Index cash flow 100 236 83 107
(136) The stock level dropped by 54 % from 2007 to the end
of the RIP, which is mainly explained by the increased
(141) Investments increased during the period considered. The
captive demand.
investments related to increases in production capacity
with the aim to deliver both the captive and the free
markets.
5.5.4. Profitability
5.5.4.1. P r o f i t a b i l i t y o n t h e f r e e m a r k e t
(142) The investigation also showed that the return on
investments, i.e. pre-tax net profit of the product
Profitability on the free
market
2007 2008 2009 RIP
expressed as a percentage of the net book value of
fixed assets allocated to the product, decreased during
Index 100 447 218 253
the period considered.
(137) The profitability of Union industry’s sales to unrelated
(143) Cash flow increased by 7 % over the period considered as
parties on the Union market improved significantly by
the decrease in profitability could be compensated by a
153 percentage points during the RIP. This development
decrease in inventory in the second half of the period
can be explained by an average increase in prices of 2 %
considered.
and a decrease in production cost. As compared to the
profit margin achieved in the review investigation period
of the last expiry investigation, the profit has increased
by more than 400 percentage points.
5.5.6. Employment, productivity and wages
2007 2008 2009 RIP
(138) It should be noted that, with the exception of year 2007,
Union industry profit level was above the target profit
Index employment 100 106 111 109
margin established in the previous expiry review investi
gation; i.e. 10
% (target profit), over the period
Index productivity 100 89 87 89
considered.
Index wages 100 104 106 106
(139) Two Union producers claimed that profitability had not
been assessed properly as the profit achieved by related
(144) Employment increased by 9 % during the period
upstream suppliers were deducted from their costs. In
considered in line with the investments in production
this regard, it is consistent practice to deduct the
capacity, while average wages increased by only 6 %.
profits achieved by related parties involved in the
Productivity decreased by 11 % overall following the
production of raw materials. In these circumstances,
unexpected technical difficulties faced by one Union
this argument had to be rejected.
producer.

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L 206/16
EN
Official Journal of the European Union
11.8.2011
5.5.7. Magnitude of the amount of countervailable subsidies
considered that the Union industry did not suffer
and recovery from past subsidisation
material injury during the period considered.
(145) Given the volume of the subsidised imports from India,
the impact of the actual amount of subsidisation cannot
be considered to be significant.
5.7. Effect of subsidised imports
(151) Given the low volumes of the product concerned that
were imported in the Union over the period considered,
(146) The situation of the Union industry improved
the subsidised imports did not adversely affect the
significantly since the last review investigation and in
performance of the Union industry. Indeed, as stated
the period considered. It can therefore be assessed that
above, it is considered that the industry did not suffer
the Union industry managed to recover fully from past
material injury during the period considered.
subsidisation.
6. LIKELIHOOD OF RECURRENCE OF INJURY
5.6. Conclusion on the economic situation of the
Union industry
(152) It is recalled that the Union industry did not suffer
material injury during the period considered as most
(147) Between 2007 and the review investigation period, the
injury indicators showed positive trends over this
volume of subsidised imports of the product concerned
period. In accordance with Article 18(2) of the basic
was negligible. With the exception of certain injury
Regulation, it was therefore examined whether the
indicators such as market share, production volume
expiry of the measures in force would be likely to
and return on investment, most injury indicators
result in a recurrence of injury.
including profitability (+ 153 %), sales price (+ 4 %),
sales volume (+
14
%), employment (+
10
%) and
investments (+ 29 %) developed positively during the
period considered. The profit levels achieved in the
Union market were, with the exception of year 2007,
6.1. Spare capacity in the country concerned
above the target profit margin established in the
(153) The investigation showed that the capacity utilisation of
previous expiry review investigation; i.e. 10 %. The
the three cooperating Indian producers had reached very
positive trend shown by the vast majority of indicators
high levels in the RIP. On that basis, spare capacities,
is mainly due to the reliability of the Union industry and
which could be directed to the Union market in the
the long standing customer relationship that it has
absence of measures, would appear to be limited.
developed over the past years, but also to the price
level that it managed to achieve on the market.
(154) After disclosure it was claimed by several Union
producers that the spare capacities in India were high
(148) One Union producer claimed that the analysis of the
and that the capacity utilisation rate of the cooperating
price and profit trends should take account of the
Indian exporting producers was not representative for the
shortages in raw materials in 2007 and 2008. It was
Indian sector as a whole. One Union producer even
claimed that these shortages led to exceptional
claimed that the spare capacities of seven leading
increases in prices and profits in 2008 and to a limited
Indian exporters would represent volumes largely above
extent in 2009. In this regard, as can be seen in Tables
the Union free market consumption.
5.5.2.1 and 5.5.4.1, the exceptional price and profit
levels only pertain to 2008. The profit levels achieved
in 2009 and the RIP appear no longer to be affected by
the raw material shortages. The conclusion in recital 139,
that profits throughout the period considered were above
(155) In this respect it should first be underlined that the
the target profit, remain valid.
capacity utilisation rate of the three cooperating
exporting producers was a weighted average calculation
based on verified data and specifically relating to the
product concerned. Moreover, the three cooperating
exporting producers concerned were large producers
(149) Regarding captive sales, the option for the Union
and among the seven Indian exporters referred to, by
industry to sell part of its production on the captive
the claimant, as ‘leading’. On the contrary, the data
market ensured high levels of capacity utilisation and
presented by the Union producers on these seven
enabled the Union industry to dilute fixed costs and to
Indian producers’ spare capacity were mainly based on
remain cost competitive.
‘market knowledge’ and, although this was specifically
requested, they could not be substantiated by solid
factual evidence. Therefore, that information had to be
disregarded and it was confirmed that, based on the
(150) In conclusion, in view of the positive development of the
verified data on the file, Indian spare capacities appear
indicators pertaining to the Union industry, it is
to be limited.

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EN
11.8.2011 Official
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Union L
206/17
6.2. Export behaviour of the Indian exporting
6.4. Conclusion on the likelihood of recurrence of
producers
injury
(156) On the basis of data from Indian official statistics, it was
(160) On the basis of the above, it was concluded that, should
established that the prices of export sales to India’s ten
measures be allowed to lapse, subsidised imports from
main export markets were around 20 % on average lower
India are not likely to cause material injury to the Union
than the prices of the Union industry sales on the Union
industry as most injury indicators developed positively
market in the RIP. These Indian export prices were in line
over the period considered in spite of significant and
with the prices of the other main players on the Union
increasing imports from other countries that were
market as set out in recital 119. It was found that low
priced similarly to Indian exports to other countries. It
priced imports during the period considered from these
was therefore concluded that material injury was not
other countries did not have a negative effect on the
likely to recur, should measures be allowed to lapse.
performance of the Union industry. In these circum
stances, it is considered that, should measures be
allowed to lapse, Indian export prices would likely not
7. UNION INTEREST
be harmful to the Union industry as it is already facing
competition from other exporting countries with the
(161) One Union producer claimed that a Union interest test
same pricing behaviour without suffering any material
analysis should have been carried out. In this regard, as it
injury.
has been concluded that there is no likelihood of
recurrence of injury, a Union interest test serves no
purpose. In these circumstances, this claim was rejected.
(157) Two Union producers also submitted that, if measures
were to lapse, Indian producers would redirect exports
8. SPECIAL MONITORING
currently sold on other markets to the Union on account
(162) In view of the finding on the likelihood of continuation
of the attractiveness of the Union market in terms of
of subsidisation as mentioned in recital 100 and the
prices. First of all it is noted that, if Indian producers
impact it might have on future trade flows, the
were to re-direct their exports to the Union, they would
Commission will monitor the import volumes of the
enter in competition with other third countries that are
product concerned. Should there be a significant
already exporting significant quantities to the Union.
change in these quantities, the Commission will give
Furthermore, as mentioned in recital 119, it has been
consideration to what action, if any, is to be taken.
concluded that imports from third countries, at prices
similar to Indian export prices to other markets, have
not affected the performance of the Union industry.
On this basis, it is considered that if Indian export
(163) The monitoring will be limited to a period of 2 years
quantities to the Union increase at prices similar to
after the publication of this Regulation.
those on other export markets, the Union industry
would not suffer any material injury.
9. TERMINATION
(164) In the light of the results of this review investigation, it is
considered appropriate to repeal the countervailing duty
(158) Two Union producers also claimed that the fact that
on imports of certain broad spectrum antibiotics orig
there were import bans in place in the US against
inating in India.
certain antibiotic production plants in India would lead
to the re-direction of additional quantities to the Union
market. However, in this regard, the conclusions in the
(165) Interested parties were informed of the essential facts and
preceding recital on the possible re-direction of exports
considerations on the basis of which it was proposed to
remain valid.
terminate the investigation and were given the oppor
tunity to comment. The comments received were
addressed under the relevant sections above and were
not of a nature to change the above conclusions.
6.3. Captive market
(159) While the captive market accounted for 50 to 60 % of
HAS ADOPTED THIS REGULATION:
the free and captive markets of the Union industry in the
period considered, consumption in the Union industry
captive market increased by more than 20 % over the
Article 1
same period. Considering the characteristics and size of
this market, it is believed that, should measures be
The expiry review of the countervailing measures applicable to
allowed to lapse, the captive market would not be
imports of certain broad spectrum antibiotics, currently falling
affected by the likely increase in Indian exports and
within CN codes ex 2941 10 00 and ex 2941 90 00 originating
would therefore continue to ensure high capacity utili
in India, initiated pursuant to Article 18(2) of Regulation (EC)
sation rates and economies of scale for the Union
No 597/2009, is hereby terminated and the measures in force
industry.
on imports originating in India are repealed.

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L 206/18
EN
Official Journal of the European Union
11.8.2011
Article 2
This Regulation shall enter into force on the day following its publication in the Official Journal of the
European Union.
This Regulation shall be binding in its entirety and directly applicable in all Member States.
Done at Brussels, 4 August 2011.
For the Council
The President
M. DOWGIELEWICZ

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